Ex-Interior Chief Is Indicted In Influence-Peddling Case

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Former Interior Secretary James G. Watt was charged today with perjury and obstruction of Justice in a 25-count felony indictment returned by a Federal grand jury investigating fraud and influence peddling at the Department of Housing and Urban Development during Ronald Reagan's Presidency.

The charges center on Mr. Watt's activities as a private housing consultant after he left the Reagan Cabinet in 1983. Arlin M. Adams, the independent prosecutor investigating the housing agency, said Mr. Watt was paid $500,000 by clients who won lucrative housing grants after he interceded with top officials at HUD from 1984 to 1986.

The indictment charged Mr. Watt with lying about his consulting activities, first to a Congressional panel that investigated the agency in 1989 and later to the grand jury investigating the case. The indictment also accused him of withholding for more than four years crucial documents that contradicted his testimony.

As Interior Secretary, Mr. Watt was known for his belligerent conservatism on land and water issues and his sometimes outrageous off-the-cuff remarks. He once compared environmental critics of the Reagan Administration to Nazis and Communists. When he tried to ban the Beach Boys from appearing on the Capital Mall in 1983, he earned a Presidential reproach from Mr. Reagan who gave Mr. Watt a model of a foot with a bullet hole in it. In a comment that preceded his departure from the Interior Department, he said an advisory panel on coal sales had "every kind of mixture." He went on: "I have a black. I have a woman, two Jews and a cripple."

Mr. Watt and his lawyer, William Bradford Reynolds, a former head of the civil rights division at the Justice Department, issued a defiant statement today denying that Mr. Watt, who lives in Jackson, Wyo., broke any law. "First, I did not lie to the Congress or to the grand jury nor in any way obstruct justice," Mr. Watt said. "Second, the facts demonstrate no wrongdoing, and third, the Office of Independent Counsel lawyers know I have not violated any criminal law."

Specifically, the indictment accused Mr. Watt of lying about the extent of his dealings with top HUD officials like former Secretary Samuel R. Pierce Jr. The indictment said Mr. Watt had denied meeting with Mr. Pierce about several specific development projects when the evidence showed that he had in fact lobbied on behalf of the housing projects with Secretary Pierce.

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In addition, the indictment charged that in contradiction to Mr. Watt's testimony, he met with Deborah Gore Dean, an executive assistant to Mr. Pierce who was convicted of 12 felonies in 1993, to obtain her support for a plan to block competitors from winning HUD money that he had sought for his own clients. Mr. Watt was also charged with lying about how much clients paid him and for which projects those clients had sought HUD financing.

The indictment also charged that Mr. Watt had tried to obstruct the grand jury investigating the case by withholding until this year important documents that contradicted his Congressional and grand jury testimony. One person said the documents included correspondence between Mr. Watt and his employers that detailed his success in dealing with HUD on behalf of his clients.

The lengthy list of charges, each of which has a maximum penalty of five years in prison and a fine, is unusual in a white-collar political corruption case when a conviction on even a single count can ruin a reputation. The multiple charges seemed to be a measure of how seriously Mr. Adams regarded Mr. Watt's conduct. In a stern statement with the indictment, Mr. Adams said Mr. Watt's false testimony and concealment interfered with his five-year-old investigation and "added substantially to the investigation's length and its cost."

Nevertheless, Mr. Adams said that the Watt investigation helped the Housing agency recover almost $10 million in low-income housing funds. The money was awarded to a local housing authority in the Virgin Islands in 1985 in connection with one of the projects that the indictment says was given money at Mr. Watt's request. Mr. Adams's staff discovered, however, that the money was never used to create low-income housing. This information will allow HUD to recapture these funds.

Last month, after winning 16 convictions by trials or guilty pleas, and $2 million in fines, Mr. Adams said he had decided not to charge Mr. Pierce, whom the prosecutor criticized as a disengaged figure whose inattentive stewardship contributed to an environment in which improper conduct occurred.

A version of this article appears in print on February 23, 1995, on Page A00021 of the National edition with the headline: Ex-Interior Chief Is Indicted In Influence-Peddling Case. Order Reprints|Today's Paper|Subscribe